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31 december 2006

European payment instruments : France adopts its migration plan

On October 27, the national SEPA committee adopted the plan for France's switchover to new European payment instruments, which will ultimately replace most national payment instruments.


The objective of the SEPA(1) project, initiated by the European Commission, is for every European to be able to make euro payments as easily in all EU countries as in their own country. Under this vast plan, European authorities will coordinate the migration plans of each euro-zone country.

A collective effort

To draw up the French migration plan, the Banque de France and the French Banking Federation set up the National SEPA Committee, which they co-chair. This committee includes representatives of all parties concerned, including banks, government agencies, companies, merchants and consumers, as well as members of parliament and a representative of the Economic and Social Council. It met for the first time in April.

Payment instruments will soon be standardised

The guiding principle of the National SEPA Committee has been to maintain the quality of France's existing payment systems. Within this framework, French banks will be able to offer European cards, bank transfers and direct debit to their customers beginning in 2008. These three payment instruments account for almost 75% of non-cash payments in France. The banks will first have to make the necessary adjustments to their IT systems, train their retail network employees, update customer brochures, etc.

Both French and European payment instruments will be valid during a transitional period, to allow non-banking companies and government agencies to make the preliminary adjustments to the new payment instruments, including changes to their IT systems, migration of databases, switchover approach, etc. National payment instruments are set to be withdrawn definitively at the end of 2011 for bank transfers and at the end of 2012 for direct debit. For bankcards, the transition period will consist of a phase-in that should be completed in 2010.

A nationwide report system will be set up to monitor the phase-in of all new payment instruments and progress by the participants involved. The system will help decide whether to confirm or modify the migration deadline.

Still some uncertainties to be raised and more analysis required

The current timetable may very well be adjusted, as there are still many uncertainties, including the payment services directive, the Commission's position on business models, bankcards and direct debit, compatibility with competition law, SEPA direct debit and migration plans in other countries.

The migration plan is thus a provisional version at present that will have to be supplemented and possibly revised. A new meeting of the National SEPA Committee is set for 27 March 2007, as additional analysis has proven necessary.

(1) Single Euro Payments Area. SEPA includes the European Union, as well as Iceland, Liechtenstein, Norway and Switzerland

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